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WASHINGTON (6/23/08—The Credit Union National Association (CUNA) Friday underscored the importance to credit unions of new financial services regulatory relief legislation and vowed to continue its push to get the bill to the President’s desk for a bill signing. CUNA Senior Vice President of Legislative Affairs John Magill commended the bill’s authors for their solid steps toward regulatory relief for credit unions, bank and thrifts. The Credit Union, Bank and Thrift Regulatory Relief Act of 2008 (H.R. 6312) was introduced late Thursday by Reps. Paul Kanjorski (D-Penn.), ed Royce (R-Calif.), and Dennis Moore (D-Kan.). “These members of the House Financial Services Committee have shown with the introduction of this measure their commitment to credit unions to obtain regulatory relief– particularly in the midst of a tough presidential election year. Along with Chairman Barney Frank, these three deserve the thanks and appreciation of credit unions for taking action to give us more flexibility to serve our members,” Magill said. “This is an important step in ultimately getting all of what we need – including the MBL (member business lending) and PCA (prompt corrective action) reform,” Magill said referring to priorities contained in the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537), but not in the new legislation. “Our view is that victories beget victories. We fully intend to stay on the congressional radar screen. In addition to seeking Senate action in this measure, our next step will be to push for a PCA reform hearing in the House. We are on the right track, but let’s be clear: It’s a track that takes time and patience,” Magill said, adding: “Chairman Frank has made it abundantly clear that he feels this approach, at this time, has the best chance of giving credit unions regulatory relief in this legislative environment.” CUNA expects H.R. 6312 to pass the House under suspension of the rules as early as Monday, but sees a tougher road in the Senate. “The Senate just is not as far along in the process as was the House, but we will make our case there,” CUNA Vice President Ryan Donovan, said Friday. He acknowledged the process is further complicated by the tight legislative calendar in both the House and Senate, where barely more than 30 scheduled working days remain for the year. Among the major credit union provisions, the new bill would allow all federal credit unions to apply to serve underserved areas and exempt member business loans made in underserved areas from a statutory 12.25%-of-assets cap, It would also grandfather previously approved underserved fields of membership for credit unions. H.R. 6312 also would permit short-term payday loan alternatives within a credit union’s field of membership. It bill addresses the current investment limit in credit union service organizations (CUSOs) and proposes to raise it to 3% of unimpaired capital and surplus, up from 1%. The bill also would:

* Enhance the 2006 regulatory relief provisions that allowed the National Credit Union Administration (NCUA) to increase the 12-year maturity limit on non-real estate secured loans to 15 years, Section 104 would further permit the agency to issue regulations providing for loan terms exceeding 15 years for specific types of loans; * Give the NCUA with greater flexibility to respond to market conditions; * Clarify existing law that permits credit unions to participate in loan programs secured by the insurance, guarantees, or commitments of State or Federal governments, such as the Small Business Administration’s 504 program. The section provides that the loan maturities, terms, and conditions on these loans may be specified in applicable regulations; and * Encourage small business development in underserved urban and rural communities by excluding from the statutory cap any member business loans made to members in underserved communities. The bill’s language clarifies that business loans made to businesses operating on a nationwide basis would not be exempt from the cap, but business loans made to locally owned franchises of businesses operating on a nationwide bases would be exempt if in an underserved area.

Use the resource link below to access a CUNA summary of the bill. Also, watch News Now for CUNA’s live posting of analysis of bank and thrift provisions of the legislative package.

WASHINGTON (6/23/08)—A new House bill that, in part, addresses aspects of member business lending (MBL) and field of membership issues for credit unions also contains relief provisions for banks and thrifts. For instance, H.R. 6312, the Credit Union, Bank and Thrift Regulatory Relief Act of 2008, would remove the current thrift caps on auto and business lending. For commercial banks it would, most notably, authorize the payment of interest on reserves by a federal reserve bank at least quarterly on balances maintained there on behalf of a depository institution. It proposes to allow banks to pay interest on business checking accounts. Just as the credit union provision of the newly introduced legislation were based on the Credit Union Regulatory Relief Act (CURRA), the bank and thrift provisions also were based on a currently pending bill, the Bank and Thrift Regulatory Relief Act of 2008 (H.R. 5841), introduced in April. Left behind from that bill, however, were sections that would have allowed banks and thrifts to reorganize more easily as LLC or Subchapter S organizations (Section 101, 102 and 206 of H.R. 5841). CUNA Vice President of Legislative Affairs Ryan Donovan Friday noted many may recall when CUNA opposed removing the business lending cap for thrifts during House-Senate negotiation of the Financial Services Regulatory Relief Act of 2006. However, he said, the situation in 2008 is different. "That time, the package of provisions was incredibly unbalanced. This time, to achieve a balanced bill, the banks lost LLC and Subchapter S flexibility, which in the long run is probably more important to them. "But for credit unions, I think the important part of the bill is not what the banks got or didn't get, the important thing is to look at the relief that the bill provides credit unions. This is a good bill that includes the underserved areas FOM provision and member business lending relief." Some provisions of the new regulatory relief measure, introduced late Thursday by Reps. Paul Kanjorski (D-Penn.), Ed Royce (R-Calif.) and Dennis Moore (D-Kan.), benefit credit unions, as well as banks and thrifts. One example is the proposed change in Gramm-Leach-Bliley privacy notification requirements. Under this bill, financial institutions would not be required to send annual privacy notifications under certain circumstances if it has not changed its policies and practices with respect to disclosing nonpublic personal information since its last disclosure. For more details of the bill, use the resource link below.

* WASHINGTON (6/23/08)--Treasury Secretary Henry Paulson signaled support Thursday for a receivership plan aimed at investment banks in the event of a failure. Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair had suggested the plan a day before, stating that the FDIC would be equipped to handle such a program. Paulson gave his support after a speech before the Women in Housing in Finance (American Banker June 20). During his speech, Paulson noted the Fed would need appropriate authority to respond to and address risks in the market. “Defining the scope of the Fed’s new authorities and responsibilities is not a simple task, and the definition must balance two very important priorities--providing additional stability to the financial system on the one hand, while limiting moral hazard on the other,” he said ... * WASHINGTON (6/23/08)--Regulators disagree on the necessity of new laws to increase oversight of investment banks. On Thursday, the Securities and Exchange Commission (SEC) said a legislative fix is needed. The SEC is partnering with the Federal Reserve Board to create guidelines so the two can share information. But Scott Polakoff, senior deputy director and chief operation officer from the Office of Thrift Supervision (OTS), said legislation is not necessary and noted that the OTS is the regulator under the Gramm-Leach-Bliley Act of 1999. Treasury Secretary Henry Paulson said he agreed with the SEC, and questioned the long-term ramifications of its relationship with the Fed. “A more difficult issue is how this newly formalized relationship evolves when these temporary facilities eventually close and how the memorandum of understanding [between the SEC and the Fed] will be perceived by the marketplace,” he said in a speech before Women and Housing in Finance ...